Medica

Private Equity Manager (GP)

Case study

About the company

Medica is a provider of teleradiology services with operations in the UK, Ireland and the USA. The company provides outsourced reporting of Magnetic Resonance Imaging (MRI), Computed Tomography (CT), ultrasound and X-ray images to customers including NHS trusts, the Irish Health Service Executive, private hospitals and insurance groups.

Founded in 2004, Medica has grown substantially to become a high-quality business with a reputation for reliable services and excellent teleradiology reporting, which has resulted in strong customer advocacy.

Investment rationale

• There are significant structural tailwinds in the teleradiology industry. Strong demand for teleradiology services has created a backlog, while the industry is suffering from a shortage of radiologists.
• Medica benefits from high barriers to entry as it is difficult for new entrants into the market to recreate Medica’s extensive network of radiology specialists and doctors. As a result, Medica has a “sticky” customer base.
• The business has an attractive financial profile with healthy margins and strong cash flow generation.
• The recent acquisitions in Ireland and the USA have expanded Medica’s geographic footprint and diversified its services.

Our relationship

Pantheon has a long-standing relationship with IK Investment Partners (“IK”) dating back to 2000, and holds six advisory board seats with the manager. PIP is currently invested in three IK funds on a primary basis. PIP is also a co-investor alongside IK in Salad Signature, a manufacturer of salad spreads.

Active management and value creation

IK has a track record of creating value in the healthcare sector having invested in 23 healthcare companies across Europe since inception, deploying a total of €2.1bn.

The manager views M&A as a key tool to continue Medica’s growth trajectory with further investment expected to increase the size and speed of its buy-and-build strategy. Organically, the manager sees value creation opportunities through the delivery of scale and deeper penetration of both new and existing telemedicine services, in new and existing geographies.

Additionally, the manager plans to leverage artificial intelligence to improve Medica’s workflow, minimise their customers’ backlog and ultimately enhance patients’ medical journey and outcome.